tv Nightly Business Report PBS April 27, 2015 6:30pm-7:01pm PDT
this is "nightly business re" with tyler mathisen and sue herera. blueowout quarter. big dividend increase and a really really big buyback. inside apple's results and what's next for the world's most valuable company. on strike. labor tensions revived at the nation's busiest ports. this dispute is different. and not on the menu. what chipotle did that no other national restaurant chain has ever done before. all that and more tonight on "nightly business re for monday april 27th. good evening, everyone. and welcome. i'm tyler mathisen. sue herera has the night off. well apple did it again.
the most valuable publicly traded u.s. company reported a blowout quarter selling more than 61 million iphones in just the first three months of the year. proving to investors that its smartphone sales are still going very strong. here are the numbers and there are a lot of them. apple reported a 33% increase in its quarterly profit over a year ago. it pulled in $2.33 a share, that was 17 cents better than estimates. e up 27%. coming in at an astonishing $58 billion, easily surpassing expectations there and apple is going to give back more to shareholders increasing its dividend 11%. boosting its share repurchase program by $50 billion to a total of $140 billion and pledging to return a total of $200 billion to shareholders through buybacks and dividends by 2017. and how about for it? it now stands at $194 billion
and investors initially sent shares to a new high in after hours trading. josh lipton now with more on apple's earnings and what tim cook told him earlie >> reporter: the big number in apple's latest earnings report $61.2 million. that is the number of iphones that apple ships in a quarter and that was better than expected. wall stree was looking for apple to ship about 57 million iphones. i did have the chance to sit down and speak with ceo tim cook that found iphones overall, 44% year over year ak pointed out the growth and particular geography, greater china up 70%. the u.s. was up 20%. mexico up 80% and south korea up 100%. the reason that's important is for all the buzz and talk about apple watch or apple tv it is the iphone that is the engine of apple's business. it still contributes more than 50% of this company's sales.
for "nightly business report," m josh lipton in cupertino, california. >> david gerty is a fan of apple, apple shares and why he thinks the stock could gain 35% or more from today's already lofty levels. principal of his own tech firm gva research. david, welcome and as always great to have you with us. josh lipton just pointed out that 50% of apple's profits come from one product and that is the iphone. is that really the way it ought to be there or is that potentially a risk at some point? >> it's been a risk investors have been focusing on for a long time. that to the extent that apple has been as surveillance as as they've been they're small in penetration in terms of total global market. probably less than a third of the units that are out there and if we look at what's driving economic growth globally it's going to be continued
penetration of devices like smartphones, basically internet enabled smart devices and apple clearly is the premium brand in this area. we would have to say that yes, you know there is risk but the thing that's nice to look at is we see strong reception for new products such as the apple watch, a device that's going to rely upon people having an iphone to actually use. but that seems to be taking fairly good uptake and what's good for investors to look at is that the apple watch will have better than average profit margins. so we're going to be looking here at profit margins, arguably rising rather than falling. >> so i hear you implicitly saying that the apple watch is going to drive iphone sales at least marginally higher. >> actually what i was saying is that the prospects that to the extent that iphone 6 and 6 plus sales a being as successful as they are, actually has the opportunity to drive apple watch sales. >> mm-hmm. >> so you'll have a nice add on. the thing to think about here even if you look at the actual
selling price for the smartphone being around $660 average apple watch prices most likely will be moved coming in perh higher than that. >> you have a stock price target of about $180 a share which is 35% from current current levels. how do we get there? what does the market have to revalue to take the stock there? >> oh first and foremost i mean apple currently is trading at about 15 ti or so this current year's estimate for earnings. the company is growing their earnings, probably b 2% 20% rate. a price earnings trading to their growth rate. a lot of the discount i think is due to the fact people are concerned about this dependence on the iphone. as we start to see the success of products like an apple watch, as we start to see broader portfolio strength if you will then i think you have it's not unreasonable to see technology stocks trade in line with their
earnings growth rate and with a company like apple trading at discount you know this is a gap which if it closes just to get one time its growth rate is what's going to get you on current earnings number for this year and next up to the $180 level. >> very quickly, if you could pinpoint one risk to that hypothesis and to apple stock prices what would it be? >> i think that, you know some of the concerns people have looking at larger addressable markets such as perhaps the possibility that apple would get into the car business, obviously, there are always risks to have companies enter new markets. cl has any business going out in manufacturing cars but that's not to say they shouldn't be in the business of potentially designing cars made in collaboration with other companies. it's a question here of how well is apple actually executing on the strategy to go into new end markets. i think what investors hav to take away from the launch of the apple watch and the success it's seeing is we should have greater confidence that management does know how to expand the product
portfolio and start to value the y accordingly. >> thank you, good to hear from you. >> you bet. nasdaq highs but the gains didn'ts biotech shares turnecloser. dow finished at 18,037. nasdaq snapped five day win streak falling 32 and the s&p 500 dropped 8. despite the down day though, positive ts are emerging in the market and the bulls are looking to some big events this week that could move stocks. bob pisani has more now from the >> reporter: stocks ended in the red but still just off record highs. this is a great relief to everyone who worried that the market could not possibly advance once the feds start the qe program and certainly not within a few months of the fed raising rates which seems likely later this year. with the fed meeting this week
the big question how will they characterize the economy? will it be enough to get desiesively out of the trading range we've been in? the economic data has certainly been choppy with q1's gdp up a measly 1%. yi there's a good chance the three factors moving the market the bad weather, the weak oil and the strong dollar all likely temporary and now reversing. and indeed they are reversing. west texas intermediate and crude near the highs of the year while the dollar prize stopped and even declined since its highs in mid me sto gains ahead. the strong dollar in particular has been a mess for multinational companies. look at the difference between big cap s&p 500 where many companies get half of revenues overseas and the small cap s&p 600 get little, if any overseas. down 3.4% in the first quarter. the s&p, 600.
revenues up 5%. wow. that's the differenc mor 8 percentage points and that's largely the strong dollar hurting the top and the bottom line. for "nightly business report, i'm bob pisani at the new york stock exchange. applied materials in tokyo, electron scrapped their merger plans. the multibillion dollar deal would have created one of the world's largest semiconductor equipment manufacturers. both companies said they didn't believe they could get any trust approval. shares of applied materials dropped sharply in trading today. you can see there down more than 8% in 1987. mylan rejected farmpharmaceutics takeover. mylan said it remains committed to producing ireland's perrigo in a $22 billion proposal spurred last week. mylan, perrigo ended lower
today. a new bird flu found in four iowa poultry farms. the iowa department of agriculture said the new case affects nearly 2.3 million birds. that brings the total number of confirme cases out in iowa to more than 6 milli today, chipotle which builds itself as a healthier fast food alternative became the first natural restaurant chain to offer a menu completely free of genetically engineered ingredients. that's taken almost two years to eliminate foods made with genetically modified organisms or gmos from its supply chain. but chipotle said it's all part of rethinking the . as of today, if you want your food free of gmos and you want it fast you can get it at chipotle. and at its shop house, southeast
asian restaurants. gmos a engineered to improve production pests or require less water to grow. by the fda and surprisingly pvalentpr n 90% of corn and soybeans produced here are genetically modified. chipotle's move has been in the works since it became the first chain to voluntarily disclose which foods contain gmo ingredients. founder steve els down plays any financial impact and sees today's move as a natural next step. >> i wouldn't think about the removal of gmos as being a significant hurdle financially. but for years now, we've been committed to what we call food with integrity. so the removal of gmos is just a natural evolut that. >> reporter: still, chipotle standards sometimes do eat into its results. first quarter sales were up more than 10%. but that was short of estimates.
amiss chipotle blamed on ongoing pork shortage because refused to sell meat it claimed came from farms that mistreated animals. gmos have long been a source of controversy. many countries including australia, japan, and much of europe restrict or even ban the production and sale of genetically modified foods. chipotle and others argue that more studies are needed to determine the long-term effects of eating food with gmo ingredients. though they've been deemed safe by both the fda and world health organization. even if they are safe though, consumn changing. last year for example, general mills responded to concerned parents by switching to all non-gmo ingredients and whole foods require all of its suppliers to label gmo products by 2018. since the early 1990s, chipotle has staked its claim as a
healthier fast food alternative. early adopter of what appears to be a fast growing trend. and today, shares of chipotle closed higher. they finished at $643 a share. the west coast labor troubles returned to the nation's busiest ports but this time not a dispute between shipping companies and the international longshoremen. this time it's different. morg >> reporter: just as the country's biggest port complex was starting to recover from congestion another labor strike has struck. today, truck drivers hauling containers for four companies ticket to picket lines. the west coast port of los angeles and long beach. the gripe? job classification. drivers at pacific 9 transportation intermodal bridge transport, and harbor rail are considered independent contracts but they want to be company employees. a move they say would result in better wages and workplace protections.
not to mention the ability to unionize. but trucking companies counter that the pay is good has to deal with the driver shortage and this strike doesn't count the majority of workers. >> i don't think it lasts that long because these are high paying trucking jobs. it makes the equation easier to negotiate. if we were to see an extended slowdown we could see everyone affected from the northern and union pacifics to the railroads that pull loads directly from there, the jb swifts of the world, it's premature to make that kind of concern. >> rep t port strikes over the past year had little impact with a few hundred drivers out of the port's 16,000 picketing, the ports are still open for business. but experts say the situation sheds light on a much bigger issue. what happens if these drivers succeed in being recognized as
company employees? >> if you disallow contractor status then you have much more expensive employees at your hands. you haveassets pay social security tax, medicare tax, withholding, a different situation from a legal label perspee as well as you have to buy the assets they currently buy and maintain. >> reporte strike aside, this debate making its way through californiaou system truck drivers filing misclassification suits since last fall's high profile cases already found in favor of drivers. for "nightly business report,. still ahead, the brand new companies that are cashing in as home remodelling goes dig
corinthian college is closing its doors, shutting down remaining 28 campuses and what's believed to be the biggest shutdown in the history of higher education in the united states. corinthian said it is working with other institutions to help the displaced more than 16,000 students who now won't get their degree. the announcement comes a few weeks after the department of education fines corinthian $30 million for misrepresenting job placement data and last year the government cut off the school's access to federal aid. for those ready to start their college careers, this is decision week. high school seniors may 1 is the deadline to make final college decisions and send in a deposit to secure a spot in the freshmen
class next fall. for many a major part of this decision involves evaluating the financial aid award letter and sharon epperson joins us now with more on what to consider. s an emotional decision that you really sometimes can't separate purely from dollars and cents but what are the things families need to consider? >> terms of dollars and cents they really need to think of the cost of tuition for a year. fees room and board, and travel. look at scholarships and grants they offer and what they say in an award letter about federal aid eligibility. the key here is to look at this awards letter you've got the acceptance letter that's where the emotion and excitement comes in. the award letter for financial aid, people really get sticker shock and see what they're really going to have to pay. >> how do they go about calculating the actual final bottom line number that's going to affect them? >> well the first thing, they need to consider what's in there in terms of the money they're talking about. free money, scholarship and grants? that's what you to look at first. of course and then there's earned money. so a lot of times in a financial
aid package, it's a work study program which is to think about how many hours a week is the student going to have to work find the job, how much are they getting paid how will that reduce the actual cost and then think about the federal student loans they're getting, that of course, is borrowed money and then you really want to be careful you don't borrow too much and really afford to pay back. >> how can the family do the number work to figure out what they can affor pay? >> look at attendance and also those direct and indirect costs. california on the east coast? that's a big travel bigll. make sure to cover in there and off campus the intangible. and then the scholarship, the grant. and what you have as a result is the net price of the cost of going to college. >> that's going to have to come out of your pocket. >> that's going to have to come out of your pocket.
>> where quickly can people get more information? >> studentaid.edgoif. different programs that are available and then look at sally may and edvisors.com. >> great to see you. sharon epperson. proctor and cutting. that's where we begin market focus. the world's largest advertiser wants to to gilletteji gillette razors to accelerate growth. $80.60 to close. activist investor nelson peltz an active fight for influence at dupont institutional sh services or iss recommended that shareholders give the billionaire investor seat on the company's board.
this is peltz fund to push the chemical maker to split into two company sh4.5% to hire today at $74.81. container store, as much as 25% lower. after the close, the company's quarterlies and revenue came in well below estimates. the retailer blamed weather among other factors. shares as you can see way off initially after the bell. before the close, the stock was up 1% to $21.69. watch that one tomorrow. tough day for the drug maker acorn pharmaceuticals. investors got a chance to react to announcement that the company will restate its earnings from the final three quarters of 2014. and that its first quarter fili 2015 probably going to be delayed. this is some of the previously announced financial informa turned out to be wrong. shares fell 22% to $43.10. well home values rise. homeowners gain much needed equity and putting it to work.
home remodelling on the upswing again and so are the brand new companies behind popular remodelling web sites. diana olick has our >> reporter: before the dumpster comes in or the dry wall goes up the mouth designs the house. steven steven gately went online at the design build firm. >> give them an idea what you liked, disliked and it made that design process, it gave the designers a sense of who we are and what we're looking for in terms of the new space. >> reporter: g on to house, a web site that's grown into a remodelling marketplace valued at over $2 billion. >> i think that the fact that the vendors were there, the homeowners ready to do that and they really wanted the house to become the place where they do everything. >> i view it as an added cost of
doing business. >> reporte remodelling web sites not just a destination for homeowners but necessity for remodelling professionals. >> most of us got into this because we love the smell of sawdust, passion about homes and now we have to be experts in social media and all these other platforms. >> r t competition is growing fast. take for example seattle-based porch.com, a company that connects homeowners with home improvement professionals. they started in this space just over a year ago with barely 100 workers. they're busting out, literally taking on 75,000 square feet of new space, expecting at least 600 employees by year end. >> it's nice to have wins that are back. he got it into as home equity took a huge leap. it offers consumers both professional contact as well as historical information and visuals of local area renovation. >> focusing on aggregateing this data that nobody else has,
building these partnerships like nobody else has like lowe's and all of these, sets up to build products others can't and that just gives us a really big advantage. >> porch garnered $100 million of investor capital so far he says and with $300 billion remodelling business at their doorstep -- >> i have several home magazines i think i can get ri they have an awful lot to build on. for "nightly busines seattle. >> house is funded by comcast, parent company of cnbc that produces this program. coming up can a company headquarter on the other side of the globe take on apple, the richest company on earth? on apple's home .
take a look at what to watch tomorrow. pfizer merck, and ups report earnings before the l r begins two day policy meeting and consumer confidence for april will be released. that's what to watch tomorrow. well as we told you earlier in the broadcast, apple saw its iphone sales surge but now another smartphone maker that's trying to get the attention of american consumers and compete with apple head on. eunice yoo. >> reporter: these chinese phones claim many firsts. first to use a special usb port for charging to support wireless hdmi. to compete directly with the iphone 6 on apple's home turf. the lu 1, lu 1 max of letv. you probably haven't heard of it but in china, letv is a probably streaming site for videos and live tv. sort of like a netflix but with its own movie studio smart tvs
and now branded phones to rival the iphone 6. letv phones are high end. they're competitive with apples but much cheaper. the lu 1 costs $246 and the lu 1 pro sets you back $110. the company said not to worry about the low margins on the phones but to make money off of memberships to its massive library of tv shows and movies. letv offers everything from chinese seriess like "house of cards" and sports events like the ncaa driving viewership of more than 500 million. letv plans to sell its phones in china in may. and it hopes to market the lo 1 pro in the u.s. and have it here by the end of the year but some critics say the company is in over its head because unlike apple, it's never made phones before. some also believe letv's venture into america won't work well
since most of the content is in chinese. they said they're targeting communities first before a bigger audience. aims to sell 3 million phones in the first year still a fraction of apple's iphone sales, but just a start, letv says of its global ambitions. for "nightly business report, >> and that is "nightly business refo thanks for watching. have a g everyone and we hope to see you right ba.
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